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Open the door to understanding payment gateway services

Some years back, Entrepreneur magazine ran an article about the most common traits of successful entrepreneurs. While characteristics like tenacity, passion, tolerance of ambiguity, and flexibility ranked high on the list, knowledge of critical business systems such as merchant services and payment gateway services did not.

It appears that the most successful entrepreneurs don’t necessarily have in depth knowledge of every aspect of running a business, but they do know how to get the information they need and access the necessary resources to get the job done. When it comes to payment processing, merchants should be informed of their options, including payment gateways and direct payment interfaces, so they can choose the best solution for their business.

In this article, we’ll answer the most common questions entrepreneurs like you have about payment gateway services. Whether you ultimately choose to use a gateway or a direct integration solution, it’s important to know your options. Let’s get started!

Q: What exactly is a payment gateway?

A: A payment gateway provides payment processing functionality for a business, allowing the business to accept credit and debit card payments, as well as ACH and other payment types. A gateway is a third party hosted payment software solution that connects merchants to their acquiring bank’s processing platform. At the most basic level, a payment gateway is the interface to a payment processor, which accepts the transactions and settles the funds to the merchant.

Q: If I don’t use a payment gateway, what other options do I have to process payments?

A: A payment application or a direct interface to a payment processor are two alternatives to using a payment gateway. With a direct interface, card transactions are sent directly from the POS to the payment processor.

Q: What are some of the advantages of using a payment gateway?

A: Payment gateways make it possible for merchants to process payments without implementing all of the necessary software, hardware, servers and security protocols for payment processing on their own. Since a gateway eliminates the need to integrate a payment processing platform, which can be costly and time consuming depending on both the business’s needs and the system requirements, payment gateways are a convenient option for merchants that are seeking a more turn-key payment solution. Gateways often come as all-in-one packages.

Q: Do I have more options in payment processors if I use a payment gateway?

A: In many cases, yes, but it depends. In general, payment gateways provide merchants with as easier option to connect to their chosen processor without having to do their own development to code directly. But not all gateways are compatible with all payment processors, so this is an important consideration when choosing a solution.

Q: How does a direct processing interface differ from a payment gateway?

A: A direct processing interface solution typically offers an array of built-in, value added options such as transaction reporting and customer service. Unlike payment gateways, which often come in all-in-one packages, direct processing solutions offer additional flexibility and customizable features. While this is appealing to some merchants who have more complex processing requirements, it’s not necessary for all merchants. Many times, the one-size-fits-all approach of a payment gateway is more than sufficient for a merchant to accept and process payments.

Q: How do I know if I need to use a payment gateway service?

A: Depending on what payments software you are using (a POS system, ERP system, an online shopping cart, etc.), your software provider can inform you of your options. It’s important to note that if you are already using an integrated payment solution, you may be using a gateway and not even know it since it’s built in.

Q: Are payment gateways used for both online and instore payment transactions? What is the difference between the two?

A: Yes. In most cases, payment gateways can be used for card present processing, either integrated with POS software or used as a virtual terminal with a card reader, as well as for card not present processing with a shopping cart or eCommerce software.

Now that you have a solid understanding of payment gateways and whether this type of solution is the best match for your business’s credit card processing needs, it’s time to take the next step of evaluating your choices. When considering different payment providers, be sure to ask about secure payment technology included in the gateway service, checkout features (both instore and online), fees, and support services. Once you have all your questions answered, you will feel more confident about your choice.